Dower Right Construed

Many practitioners assume that dower and curtesy were "abolished" in 1980, with the enactment of Title 3B of the Revised Statutes and the creation of the joint possessory right in the marital residence. However, N.J.S.A. 313:28-2 abolished dower and curtesy only prospectively. It prevented the creation of any new inchoate estates of dower or curtesy after May 28, 1980, but existing inchoate estates were unaffected. Gladstone v. Berk, 233 N.J. Super. 228 (App. Div. 1989); see also Wamco XV Ltd. v. Farrell, 301 N.J. Super. 73 (App. Div. 1997). Today, dower consists of a life estate held by the widow, covering a one-half interest in the realty owned by her late husband. N.J.S.A. 3B:28-1; see In re Flasch, 51 N.J. Super. 1 (App. Div. 1958).
The recent decision in Matter of Dower Interest of Wheaton, 341 N.J. Super. 203 (App. Div. 2001) serves as a reminder that dower and curtesy are still part of the law of this State. The case arose when a widow brought suit in the Chancery Division seeking the sale of three parcels of realty owned by her late husband and calculating her dower interest therein. The plaintiff died before the lands could be sold. On appeal, the question presented was whether the widow's dower interest was sufficiently vested at the time of her death to permit admeasurement; ie, to allow her estate to recover a gross sum of money in lieu of dower from the proceeds of sale. 341 N.J. Super. at 206.
The husband's estate contended that the widow's dower interest abated at her death, and thus no sum in lieu of dower was due to the widow's estate. The Chancery Division held in favor of the widow. The Appellate Division reversed, holding that the widow's action necessarily abated at her death. Because the husband's lands had not been sold at the time of the widow's death, the gross sum in lieu of dower was not capable of ascertainment. The mere filing of the action by the widow prior to her death was not sufficient to cause her dower interest to vest for the purpose of admeasurement. 341 N.J. Super. at 207-208.
The court embarked on a lengthy discourse on the subject of dower under New Jersey law. It noted that the dower right was inchoate during the husband's lifetime, and became choate or "consummate" upon his death. On the other hand, since dower is a life estate, the widow's dower right must perforce terminate upon her death. After reviewing numerous reported decisions on this topic, the panel concluded that there was no support for the contention that the right to a gross sum in lieu of dower continues after the widow's death. The court analyzed, inter alia, the leading cases of Mulford v. Heirs, 13 N.J.Eq. 13 (Ch. 1860) and McLaughlin v. McLaughlin, 22 N.J. Eq. 505 (E. & A. 1871), which hold that a widow who dies after the sale of her husband's lands but before distribution of the sale proceeds is entitled to have the same paid to her estate. It also reviewed the more modern case of In re Flasch, 51 N.J. Super. 1 (App. Div. 1958), in which the husband's estate was barred from recovery of a gross sum in lieu of curtesy after the husband's death. 341 N.J. Super. at 208 -214. Thus, the Appellate Division reversed the determination of the Chancery Division and held that the widow's estate was not entitled to recover a gross sum in lieu of dower from the proceeds of sale.

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Refinance Rate Increased

The New Jersey Land Title Insurance Rating Bureau ["NJLTIRB"I has received the approval of the Commissioner of Banking and Insurance for an increase in the refinance rate of $0.25 per $1,000 in each bracket. NJLTIRB Rate Manual§4.6.1 (entitled "Refinance, Recast or Substitution Loans") is applicable where a refinance, recast or substitution loan is made to the same borrower on the same property. The new rate is effective January 7, 2002, and it applies to all applications received on or after that date.
Policy
Liability
$0-100,000
$100,001 - $500,000
$500,001 - $2 Million
Over $2 Million
Rate per $1,000
[Old] New
[2.25] 2.50
[2.00] 2.25
[1.75] 2.00
[1.25] 1.50

The rate applies to so much of the new loan policy as represents the face amount of the mortgage or mortgages (other than construction loans) being refinanced. The requirement that the borrower produce an existing title insurance policy in order to be eligible for the refinance rate was previously eliminated. Thus, the refinance rate is "transactional" in nature; i.e., it applies to the extent the transaction being insured is in fact a refinance of existing mortgage debt.
For example, assume that 123 Main Street is encumbered by two existing mortgages, the first in the face amount of $100,000 and the second in the amount of $50,000. The owner wishes to replace the existing mortgages with a new mortgage loan in the amount of $175,000. The refinance rate will apply to first $150,000 of the new mortgage ($100,000 plus $50,000), even if the borrower cannot produce title policies insuring either of the two existing mortgages. But the refinance rate will not apply to the last $25,000, because the additional money is not being applied to refinance the existing indebtedness

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Producer Licensing Act of 2001 Enacted

The Legislature has enacted the New Jersey Insurance Producer Licensing Act of 2001 ["Producer Act 2001"], P.L. 2001, c. 210, to be codified as N.J.S.A. 17:22A-26 at seq.
Its provisions remain "inoperative" until the earlier of: (a) the adoption of administrative regulations pursuant thereto; or (b) November l 2, 2002. It will supersede the current Producer Licensing Act, N.J.S.A. 17:22A-1 et seq., which it repeals.
The impetus for the enactment of Producer Act 2001 is a provision found in the Financial Services Modernization Act, commonly known as the GrammLeach-Bliley Act ["GLBA"], P.L. 106-102. GLBA autho rizes the creation of a new federal bureaucracy, the National Association of Registered Agents and Brokers ["NARAB"], unless a majority of states enact uniform laws and regulations governing the licensing of insurance producers, including the reciprocal licensing of non-resident producers, by November 12, 2002. In an effort to prevent this from occurring, the National Association of Insurance Commissioners ["NAIC"] prepared a proposed uniform statute, which has now been enacted by a number of states, including New Jersey. Reciprocal licensing is intended to permit someone who holds a valid insurance license in one state to obtain a non-resident license in other states. (The current Insurance Producer Licensing Act already permits non-resident licensing. N.J.S.A. 17:22A-7 & - 9.)
The regulatory scheme of Producer Act 2001 is substantially similar to the current Producer Licensing Act.
Producer Act 2001 provides for both individual and organization licenses, as well as resident and non-resident
licenses. In place of the key terms "solicit' "negotiate" and "effect", the new Act uses "negotiate", "sell" and "solicif" [N.J.S.A. 17:22A-28]:
"Negotiate" means the act of conferring directly with or offering advice directly to a purchaser of prospective purchaser of a particular contract or policy of insurance concerning any of the substantive benefits, terms and conditions of the contract or policy, ...
"Sell" means to exchange a contract or policy of insurance by any means, for money or its equivalent, on behalf of an insurer.
"Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular insurer.
It is anticipated that the administrative regulations to be adopted under Producer Act 2001 will be much like those currently in effect under the original Producer Licensing Act. Until the new regulations are promulgated, it is assumed that the current ones, codified as N.J.A.C. 11:17-1 at seq., will remain in effect.

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Recording Fees Increased

The Legislature has enacted a bill (S-553) which increases the
fees for recording and filing of many instruments in the county clerks' and registers' offices. P.L. 2001, c. 370, eff. ca. Jan. 8, 2002, amending N.J.S.A. 22A:4-4.1, etc. The law also increases tees for filing of documents in the Superior Court and in the Surrogates' Offices. Although the statute became effective on or about January 8, the county clerks and registers have informally agreed that they will begin charging the increased fees on documents received for recording on or after February 1, 2002. The most significant changes are set forth below; this list is not intended to be exhaustive.
[Old Fees In Brackets]
Deed, Mortgage or other Document (First Page)
[$15-00] $25.00 plus Each Additional Page of Document [3.00]5.00
Each Marginal Notation [3.00] 5.00
Abst. of Deed for Assessor [3.00] 5.00 Notice of Settlement [8.00] 15.00
Mortgage Cancellation [8.00] 15.00
Mortgage Discharge or Assignment (first page) [15.00] 25.00(exclusive of Marginal Notation)
UCC- I or UCC-3 (State or County) 25.00 [unchanged] 25.00
Example: Assume a four (4) page deed is presented for recording. The total fee will be $45.00, calculated as follows: Is' Page = $25.00; 2nd, 3rd & 411 Pages (@$5.00) = $15.00; Abstract for Assessor $5.00.

Spill Act Amended and Construed

The Legislature has amended the Spill Compensation and Control Act ["Spill Act"], N.J.S.A. 58:10- 23.11 et seq., by adopting P.L. 2001, c. 154, effective July 13, 2001. Specifically, the amendment accomplishes two things. First, it adds several definitions to N.J.S.A. 58:10-23.11b, including a definition of contamination or contaminant: "... any discharged hazardous substance, hazardous waste as defined pursuant to [N.J.S.A. 13:1 E-38] or pollutant, as defined pursuant to (N.J.S.A. 58:10A-3]". Second, it adds sub-section d(5) to N.J.S.A. 58:10-23.11 1g, which deals with liability for clean-up costs. In sum, the act provides an "innocent owner"defense to person who acquired real property (on which there has been discharge) prior to September 14, 1993, provided that the following can be established by "a preponderance of the evidence":
1. the property was acquired after the discharge occurred; and
2. at the time of acquisition, the person acquiring "did not
know and had no reason to know" of the discharge; and
3. the person acquiring did not cause the discharge to
occur; and
4. the person acquiring gave timely notice to the DEP upon actual discovery of the discharge.
September 14,1993 is the effective date of the Industrial Site Recovery Act ["ISRA"], formerly known as the Environmental Cleanup Responsibility Act ["ECRA"], N.J.S.A.1 3:1 1K- et seq. ISRA requires a party who wishes to transfer ownership of industrial property to obtain DEP clearance. Furthermore, one who purchases an industrial site post-ISRA must conduct an investigation in order to establish a defense to Spill Act liability.
Liability for clean-up expenses, which can cost millions of dollars, has been a source of controversy since the Spill Act was originally adopted in 1976. White Oak Funding v. Winning, 241 N.J. Super. 294 (App. Div. 2001), which was decided before P.L. 2001, c. 154 went into effect, illustrates this point. The property in question was owned by defendant Winning from 1976 to 1983; he operated a fuel oil distribution business at the site. Scarborough acquired title from Winning in 1983 and operated a photocopy business there until 1986, when title was conveyed to Page, who operated a florist shop. Page defaulted on his mortgage, and White Oak Funding acquired title through a foreclosure sale in 1998. Thereafter, White Oak learned the property was contaminated (as a result of its prior use for fuel oil distribution) and notified the DER White Oak asked the DEP to direct all of the prior owners to remediate the site, but the DEP sent a clean- up directive only to Winning. White Oak sued Winning, Scarborough and Page to compel them to contribute to the clean-up costs. Winning filed a bankruptcy petition.
The Law Division granted Scarborough's and Page's motions for summary judgment (in an unreported decision) and the Appellate Division affirmed. The opinion focused on White0ak's contention that Scarborough was liable as a "discharger' or, in the alternative, as a person "in any way responsible" for the discharge under N.J.S.A. 58:10- 23.11g(c)(1), which provides: Any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.
The court rejected these suggestions, holding that the above-quoted wording, when read together with the definition of "discharge" found in N.J.S.A. 58:10-23.11b, was not broad enough to encompass the Scarborough's conduct. Although White Oak urged the court to adopt the definition of "release" found in the Comprehensive Environmental Response, Compensation and Recovery Act ["CERCLA"], 42 U.S.C. §§ 9601 et seq., the Appellate Division declined to do so. In essence, the court found that Scarborough was not the owner when the discharge had occurred, and that Scarborough had done nothing during its period of ownership to exacerbate the contamination. 341 N.J. Super. at 298.
The panel noted that in interpreting the phrase "in any way responsible", the Supreme Court has held that "... ownership or control over the property at the time of the discharge... may suff ice". State, D.E.P. v. Ventron Corp., 94 N.J. 473,502 (1983) (emphasis added). Yet Scarborough was not the owner "at the time of the discharge", so the Ventron case could not be applied in order to impose liability. Similarly, the Appellate Division distinguished Marsh v. D.E.P., 152 N.J. 137 (1997), in which liability was imposed on a subsequent purchaser, because in that case the underground storage tanks had leaked during Marsh's period of ownership. Finally, the panel noted that a duty of investigation could not be imposed upon Scarborough because it had acquired title prior to 1993, when ISRA went into effect. It concluded by stating: "In these circumstances, passive migration of preexisting contamination does not result in Spill Act liability." 341 N.J. Super. at 300 - 302.

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Real Estate Tax Exemption Clarified

The Legislature has enacted P.L. 2001, c. 18, effective January 29,2001, which amends N.J.S.A. 54:4-3.6, the real estate tax exemption statute. The act adds the following wording in order to clarify that a tax exemption is enjoyed by religious and charitable entities with respect to:
... all buildings actually used in the work of associations and corporation organized exclusively for religious worship, or charitable purposes, provided that if any portion of a building used for that purpose is leased to a profit-making organization or is otherwise used for purposes which are not themselves exempt from taxation, that portion shall be subject to taxation and the remaining portion shall be exempt from taxation, and provided further that if any portion of a building is used for a different exempt use by an exempt entity, that portion shall also be exempt from taxation.
Although the act has received much unfavorable publicity in the legal community, its intention is a laudable one. The law was enacted in response to R.C. Archdiocese of Newark v. E. Orange, 17 N.J. Tax 298 (Tax Ct. 1998), aff'd 18 N.J. Tax. 649 (App. Div. 2000), which held that "... a religious or charitable organization which leases its property to an educational organization loses its tax exemption under N.J. S.A. 54:4-3.6." 17 N.J. Tax at 316. Thus, as the Bill Statement notes, the decision led to the anomalous result that "public boards of education, which are themselves tax exempt entities, are required to pay real property taxes if they lease property from a religious or charitable organization". P.L. 2001, c. 18 attempts to resolve this problem bypreserving the tax exemption of the religious or charitable entity to the extent it leases property to another exempt institution. Furthermore, the law makes clearthat only that portion of the property which is leased to a non-exempt entity is subject to taxation; the remainder is still tax-exempt. Negative comments about the law probably stem from the informal practice in many municipalities of not imposing taxes on exempt properties which were being used by non-exempt entities. As noted above, the act became effective on January 29, 2001, but its provisions are retroactive to September 30,1999.


"Title Talk" is published periodically by Chicago Title and Ticor Title Insurance Companies, and is distributed free of charge to their customers and friends
Steven G. Day, Esq., Regional Manager, Publisher
Lawrence J. Fineberg, Esq., State Counsel, Editor
Chicago Title Insurance Company
Ticor Title Insurance Company
111 Wood Avenue South
Iselin (Woodbridge Twp.), New Jersey 08830
732- 205 - 0055 Fax 732 - 205 -0330

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